Obama says strains over Ukraine not leading to new Cold War with Russia

President Barack Obama escalated U.S. economic sanctions against Russia on Tuesday for its aggression against Ukraine but dismissed suggestions the growing chill in U.S.-Russian relations marked the start of a new Cold War.

The United States and the European Union, in a carefully coordinated action, announced targeted new sanctions against Russian banks, energy and defense firms.

It was the West's most serious response yet to what it calls Russian instigation of and continuing support for the separatist uprising in the east and the shootdown of a Malaysian passenger jet on July 17 over eastern Ukraine.

Obama, speaking at the White House, said the sanctions will have a “greater impact on the Russian economy than we've seen so far” in a drive to force Moscow to stop backing the separatists.

Until now Europe had stopped short of tougher steps against Russia for fear of retaliation. Obama said the new sanctions were a sign of “the waning patience Europe has with nice words from President (Vladimir) Putin that are not matched by actions.”

Senior U.S. officials voiced growing alarm about a Russian troop buildup on the border with eastern Ukraine and a continued supply of heavy weaponry to the separatists.

These are signs that, so far at least, the sanctions are not forcing Putin to back down despite the damage the sanctions are doing to the Russian economy.

“It's not a new Cold War,” Obama told reporters. “What it is, is a very specific issue related to Russia's unwillingness to recognize that Ukraine can chart its own path.”

The new targets for sanctions included VTB, the Bank of Moscow, the Russian Agriculture Bank and the United Shipbuilding Corp., the Treasury Department said.

The sanctions on the three banks prohibit U.S. citizens or companies from dealing with debt carrying maturities longer than 90 days, or with new equity.

Five of the six largest state-owned banks in Russia are now under U.S. sanctions.

Also targeted was United Shipbuilding Corp, a shipbuilding company based on St. Petersburg, in a move that freezes any assets it may hold in the United States and prohibits all U.S. transactions with it.

The Commerce Department classified United Shipbuilding Corp as a defense technology company.

The new sanctions block the exports of specific goods and technologies to the Russian energy sector. The Commerce Department said it will deny any export, re-export or foreign transfer of items for use in Russia's energy sector that may be used for exploration or production of deepwater, Arctic offshore or shale projects that have the potential to produce oil.

Obama also formally suspended credit that encourages exports to Russia and financing for economic development projects in Russia. He warned there would be additional costs to Russia should Moscow not back down.

“Obviously, we can't, in the end, make President Putin see more clearly,” Obama said. “Ultimately, that's something President Putin has to do on his own.”

The Ukraine crisis has set back U.S. relations with Russia to near-Cold War levels. Ties were further strained this week by U.S. charges that Russia had violated the 1988 Cold War-era Intermediate-Range Nuclear Forces Treaty designed to eliminate ground-launched cruise missiles.

White House officials refused to divulge details of the allegations but demanded immediate talks with Moscow, whose response thus far has been “wholly unsatisfactory,” said White House spokesman Josh Earnest.

The new U.S. sanctions were announced during a visit to Washington by Ukraine Foreign Minister Pavlo Klimkin, who discussed prospects for resolving the conflict with Secretary of State John Kerry.

Both Kerry and Klimkin told reporters further pressure on Russia was essential to halt the flow of men, money and weapons into eastern Ukraine, but said the United States and Ukraine were examining possible political steps that could be taken inside Ukraine to address Russian concerns.

“We talked today about a political road ahead,” Kerry said. That included looking at ways in which Ukraine can convince Moscow that it will fulfill earlier promises, which included giving Russian speakers in the east more autonomy and rights.

Discussing ways to “de-escalate” the situation on the ground, Klimkin stressed Ukraine's commitment to decentralize power.

Additional reporting by Eric Beech, Will Dunham and David Storey; Editing by Sandra Maler and Tom Brown

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Ukraine claims more territory as fight intensifies with rebels

Ukraine said on Monday its troops had wrested more territory from pro-Russian rebels, advancing towards the site where Malaysian flight MH17 was brought down, which international investigators said they could not reach because of the fighting.

Troops recaptured two rebel-held towns near the crash site and were trying to take the village of Snezhnoye, near where Kiev and Washington say rebels fired the surface-to-air missile that shot down the airliner with loss of all 298 on board, Ukrainian officials said.

One pro-government militia said 23 of its men had been killed in fighting in the past 24 hours, while a rebel commander said he had lost 30 soldiers.

Analysis of black box flight recorders from the airliner showed it was destroyed by shrapnel from a missile blast which caused a “massive explosive decompression”, a Ukrainian official said on Monday.

Investigators in Britain, who downloaded the data, had no comment. They said they had passed information to the international crash investigation led by the Netherlands, whose nationals accounted for two-thirds of the victims.

In a report on three months of fighting between government forces and separatist rebels who have set up pro-Russian “republics” in the east, the United Nations said more than 1,100 people had been killed.

U.N. High Commissioner for Human Rights Navi Pillay said increasingly intense fighting in the Donetsk and Luhansk regions was extremely alarming and the shooting down of the Malaysian airliner on July 17 may amount to a war crime.

Western leaders say rebels almost certainly shot the airliner down by mistake with a Russian-supplied surface-to-air missile. Russia accuses Kiev of responsibility.

The separatists are still in control of the area where the plane was shot down but fighting in the surrounding countryside has been heavy as government forces try to drive them out.

On Monday at least three civilians were reported killed in overnight fighting, and Kiev said its troops recaptured Savur Mogila, a strategic piece of high ground about 30 km (20 miles) from where the Malaysia Airlines Boeing hit the ground, and other areas under rebel control. Rebels denied Savur Mogila had been lost, saying fighting was continuing.

MILITARY OPERATIONS

A spokesman for Ukraine's Security Council, Andriy Lysenko, said Kiev was trying to close in on the crash site and force the rebels out of the area but was not conducting military operations in the immediate vicinity.

He said Ukrainian troops were now in the towns of Torez and Shakhtarsk, both formerly held by the rebels, while fighting was in progress for Snezhnoye and Pervomaisk. The towns are all located in rolling countryside near the wheat and sunflower fields filled with debris from the downed airliner.

Government troops were also readying an assault on Gorlovka, a rebel stronghold north of the provincial capital Donetsk.

“The Ukrainian military is conducting an active assault on regions under temporary control of Russian mercenaries,” Lysenko told a news conference in Kiev.

In Donetsk, local officials said artillery fire had damaged residential blocks, houses, power lines and a gas pipeline. The city, with a pre-war population of nearly 1 million, has largely become a ghost town since rebels dug in for a stand in the face of advancing Ukrainian troops.

In Luhansk, another rebel stronghold, local officials said 93 civilians had been killed in the last month's fighting.

The site of the crash of the Malaysian airliner has yet to be secured or thoroughly investigated, more than 10 days after the crash. After days in which bodies lay untended in the sun, rebels gathered the human remains and shipped the bodies out, and turned over the flight recorders to a Malaysian delegation.

But the wreckage itself is still largely unguarded, and much of it has been moved or dismantled in what the rebels say was part of the operation to recover the bodies. No full forensic sweep has been conducted to ensure all human remains have been collected. Both side accuse the other of using fighting to prevent the investigation.

The Organization for Security and Co-operation in Europe said its observers attempting to reach the crash site with investigators from Australia and the Netherlands were forced to return to Donetsk for “security reasons”.

A rebel leader, Vladimir Antyufeyev, told reporters in Donetsk that separatist fighters escorting the international experts to the site encountered fighting and turned back.

Antyufeyev, who like most of the senior rebel leadership is an outsider from Russia, also blamed the “senseless” Ukrainian army for trying to destroy evidence at the crash site under cover of fighting.

He said government forces were advancing on Donetsk with the aim of encircling the city.

FURTHER SANCTIONS

The downing of the Malaysian airliner has led to calls for much tougher action against Russia from Western countries who had previously imposed sanctions but only on small numbers of individuals and firms.

European Union member states were expected to try to reach a final deal on Tuesday on stronger measures that would include closing the bloc's capital markets to Russian state banks, an embargo on future arms sales and restrictions on energy technology and technology that could be used for defence.

The EU added new names on Friday to its list of individuals and companies facing travel bans and asset freezes over their alleged involvement in Ukraine. It could agree to extend the list further as early as Monday.

Germany, which had been reluctant to agree tougher sanctions because of its trade links with Russia, said the downing of the airliner meant such measures were now necessary.

The leaders of Britain, France, Germany, Italy and the United States agreed on Monday that they would take further measures against Russia over Ukraine, France said.

Russia played down the impact of sanctions.

“We can't ignore it. But to fall into hysterics and respond to a blow with a blow is not worthy of a major country,” Foreign Minister Sergei Lavrov said.

Washington says Moscow has stepped up its support for the rebels since the plane was shot down, including sending more heavy arms and firing across the frontier. The Russian Defence Ministry cast doubt on pictures Washington said showed Russia had shelled Ukrainian military positions.

Sole Israeli national on downed Malaysian airliner was son of evangelical Christian

A few hours before he departed Amsterdam for Australia on July 17, Ithamar Avnon was praying for peace with his parents at their home in the Netherlands.

That evening, pro-Russian separatists shot down Avnon’s flight, Malaysia Airlines Flight 17, over eastern Ukraine, killing all 298 passengers and crew. Avnon, 26, was the sole Israeli national on board.

The son of a Dutchwoman and an Israeli who became an evangelical Christian, Avnon loved peace because of how well he and his family knew war.

His father, Dov, served for three years in the Israel Defense Forces before moving to the Netherlands in the 1970s. His older brother, Jonathan, was an Israeli paratrooper. Following his brother’s lead, Avnon voluntarily joined the paratroopers and fought with that unit in the 2009 Cast Lead operation in Gaza.

Friends and family say that Avnon, who was born in the Netherlands in 1988, was a fun-loving man with a penchant for buffoonery who was looking forward to completing his international business degree at Swinburne University in Melbourne, Australia.

“Ithamar liked horsing around, he wasn’t a stern guy,” his mother, Jeannet, told JTA. “I never thought Ithamar would join the army, but he was inspired to do it by his brother. Ithamar completed the training and got that red beret.”

One of his former commanders, Shlomi Biton, said Avnon — Ito, to his friends — was a forgetful soldier who would often lose pieces of gear, including that red beret, just moments after receiving it. Avnon got away with it because of how well-liked he was by his peers and commanders.

“I really loved Ithamar,” Biton wrote on a Facebook page in Avnon’s memory. “I wanted to be the one to give Ithamar the beret — and then another one after he lost the first one, which was typical.”

Dov Avnon moved to Holland after meeting Dutch Christians in Eilat in the 1970s. Even as an ex-Jewish Christian living in Holland, Dov Avnon and his wife raised their children with a love of the Jewish state.

After Avnon’s death, Dov wrote on Facebook: “I am happy that he grew up with the bible and the faith that Christ died for him on the cross.”

Avnon had been in the Netherlands to attend the wedding of his sister, Ruth, who learned of the flight’s demise on the radio.

“I knew immediately that it was my little brother’s flight and it felt as though I was sinking and the world around me was falling apart,” Ruth Avnon said.

In their home near Utrecht, Avnon’s parents were waiting last week for a Dutch forensics team to finish identifying the remains of the dead in the hope of recovering their son’s body.

Though the final remains found at the crash site arrived in Holland last week, the search is ongoing. Full identification of the victims could take months and it’s not yet clear whether all the bodies have been recovered. Dov has little hope of recovering his son’s remains, since he was sitting close to the engine.

“It’s a strange sort of mourning because we have no body,” Jeannet said. “I’m afraid that when and if a body is recovered, we would need to mourn all over again.”

Avnon had a knack for comedy and impersonations and had a face he would make by puckering his lips. “We called it the Berrie face,” Jeannet said.

His thespian skills also helped him at work, according to Nata Sapuga, Avnon’s former boss at a recycling company. During a business trip to India, Avnon got an upset stomach and had to run to the bathroom every few minutes while working at a business fair.

“He would tell visitors to his booth, ‘Excuse me, sir, but i just figured out that I need to exchange a few urgent words with my biggest buyer, who just passed by,’” Spuga recalled.

Holland lost 194 of its citizens on board MH17, prompting the government to declare a day of mourning — the first in a century. The national outpouring of grief has provided some consolation to Avnon’s parents.

“We are consoled by the feeling of a community, by the respect the Netherlands is showing to all victims,” Jeannet said. “It dulls the pain, as did the powerful speech of our foreign minister, Frans Timmermans, at the United Nations.”

In that speech, Timmermans condemned pro-Russian separatists for delaying access to the bodies and urged delegates to imagine they were parents of the victims “and then two or three days later see some thug steal their wedding ring from their remains.”

Western leaders also criticized Russian President Vladimir Putin, accusing him of supplying the separatists with the weapons used to bring down the plane and for failing to expedite the return of the bodies. Dov Avnon wrote Putin a scathing letter, accusing him of harboring “people who have lost all humanity.”

On Wednesday, Dov was at the ceremony in Eindhoven Airport, where the first bodies were returned. Organizers had placed a flag for every nation that lost civilians in the crash, including Israel.

“I know that flag is especially for Ithamar,” Dov Avnon said. “I am proud to be an Israeli and a Dutch citizen and grateful for this treatment.”

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Obama: Russia must press Ukraine rebels to allow plane probe

U.S. President Barack Obama piled pressure on Russian President Vladimir Putin on Monday to force pro-Russian separatists to stop blocking an international investigation into the shootdown of a passenger jet last week.

Obama denounced the Russian role in eastern Ukraine in some of his strongest language yet and pointedly appealed to Putin to cut ties with the separatists or risk greater international isolation.

“Now's the time for President Putin and Russia to pivot away from the strategy that they've been taking and get serious about trying to resolve hostilities within Ukraine,” Obama said in remarks on the White House South Lawn.

With investigators blocked from access to the crash site in eastern Ukraine and most of the bodies of the victims removed, Obama said Russia should compel the separatists to let the investigation take place. He questioned why the rebels are blocking access.

“What are they trying to hide?” he said.

Obama did not specifically threaten new economic sanctions against Russia, but he hinted at costs to come should Moscow not change course.

If Russia continues to back the rebels and they become risks not just to Ukraine but to the broader international community, “the costs for Russia's behavior will only continue to increase,” he said.

U.S. officials are increasingly confident that the Malaysian Airlines plane was shot down by the separatists with a Russian-made surface-to-air missile.

“Russia has trained them. We know that Russia has armed them with military equipment and weapons, including anti-aircraft weapons. Key separatist leaders are Russian citizens,” Obama said.

Given Russia influence over the rebels, he said, “Russia, and President Putin in particular, has direct responsibility to compel them to cooperate with the investigation. That is the least that they can do.”

“President Putin says that he supports a full and fair investigation, and I appreciate those words, but they have to be supported by actions,” Obama said.

Israeli among 298 fatalities aboard downed Malaysian plane

A 27-year-old Israeli was among the 298 victims who died when Malaysian Airlines flight MH17 crashed in Ukraine.

Dov Avnon, Itamar Avnon’s father, announced his son’s death on Facebook, the Maariv daily reported Friday.

“They say life is short — yes it is true,” wrote the Israeli-born Dov Avnon, who lives in the Netherlands and describes himself as a Christian with a Jewish background. “I am happy that he grew up with the bible and the faith that Christ died for him on the cross,” he wrote.

An acquaintance of Itamar Avnon told JTA he was in the Netherlands for a wedding and was on his way to Australia, where he studied, via Malaysia. Itamar Avnon served in the Israel Defense Forces as a paratrooper in 2007. Dov Avnon and his wife, Jeannet, have two other children, Jonathan and Ruth.

Israel’s embassy in the Netherlands offered condolences to the families of the 298 victims of the crashed plane, including 173 Dutch citizens.

The plane is believed to have been downed Thursday in Ukraine’s east, possibly by pro-Russian separatists.

“The Embassy of Israel on behalf of the people of Israel would like to express its sorrow and offer sincere condolences to the Dutch people and to all the families of those who have tragically lost their lives today on the Malaysian flight MH17,” the embassy said in a statement Thursday on its Facebook page.

In its statement, the U.S. State Department wrote: “The United States is shocked by the downing of Malaysian Airlines Flight 17, and we offer our deep condolences to all those who lost loved ones on board. May their memory be blessed.”

The plane, which left for Malaysia from the Netherlands, carried up to 100 scientists, activists, researchers and health workers who were on their way to Melbourne, Australia for a conference about AIDS, The Daily Telegraph of London reported.

Irgoen Olei Holland, a group representing Dutch-born Israelis, also offered its condolences to the Dutch embassy in Tel Aviv, the group said in a statement Friday.